<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
{ X } QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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or
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-24180
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MTL INC.
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(Exact name of registrant as specified in its charter)
FLORIDA 59-3239073
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3108 CENTRAL DRIVE, PLANT CITY, FLORIDA 33567
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(Address of principal executive offices) (Zip Code)
(813) 754-4725
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS.
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. [ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE USERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at June 30, 1996
- ------------------------------------ ----------------------------------
(Common stock, $.01 par value) 4,521,804
<PAGE> 2
MTL INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C> <C>
Part I Financial Information
Item 1 Financial Statements (unaudited)
Condensed consolidated balance sheets -
June 30, 1996 and December 31, 1995 1
Condensed consolidated statements of income -
three months and six months ended June 30, 1996 and 1995 2
Condensed consolidated statements of cash flows -
six months ended June 30, 1996 and 1995 3
Notes to condensed consolidated financial statements 4
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations
Management's discussion and analysis of financial
condition and results of operations 5-6
Part II Other Information
Item 1 Legal Proceedings 7
Item 6 Exhibits -
Reports on Form 8-K: 7
Signatures 8
</TABLE>
<PAGE> 3
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
MTL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
ASSETS
June 30, December
1996 1995
----------- ---------
(Unaudited) *
<S> <C> <C>
Current Assets
Cash $ 335 $ 322
Accounts receivable 33,910 24,579
Allowance for doubtful accounts (1,183) (1,019)
Current maturities of other receivables 984 970
Notes receivable 433 202
Inventories 664 457
Prepaid expenses 2,036 1,616
Prepaid tires 3,267 3,258
Income tax receivable 153 492
Deferred income taxes 2,830 2,737
Other 0 193
-------- --------
Total current assets 43,429 33,807
Property, Plant and Equipment 172,816 156,785
Less - accumulated depreciation and amortization (54,554) (48,885)
-------- --------
118,262 107,900
Other Assets 7,179 4,033
-------- --------
$168,870 $145,740
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current maturities of indebtedness $ 10,033 $ 6,373
Accounts payable and accrued expenses 9,225 7,609
Independent contractors payable 5,058 2,899
Other current liabilities 3,528 3,858
-------- --------
Total current liabilities 27,844 20,739
Long term debt, less current maturities 48,326 40,236
Capital lease obligations, less current maturities 1,336 2,235
Other long term obligations 4,734 3,622
Deferred income taxes 22,277 18,850
Commitments and contingent liabilities
Stockholders' Equity
Common stock 45 45
Other stockholders' equity 64,308 60,013
-------- --------
Total stockholders' equity 64,353 60,058
-------- --------
$168,870 $145,740
======== ========
</TABLE>
* Condensed from audited financial statements.
The accompanying notes are an integral part of these
condensed financial statements.
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<PAGE> 4
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
MTL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Six months ended Three months ended
June 30, June 30,
1996 1995 1996 1995
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Operating Revenues $101,076 $86,092 $54,364 $44,560
Transportation 8,748 8,209 4,440 4,111
-------- ------- ------- -------
Other 109,824 94,301 58,804 48,671
-------- ------- ------- -------
Operating Expenses
Purchased transportation 69,857 59,638 36,713 30,820
Depreciation and amortization 6,086 4,776 3,323 2,463
Other operating expenses 25,000 21,644 14,049 11,076
-------- ------- ------- -------
Operating income 8,881 8,243 4,719 4,312
Interest expense, net 1,670 1,703 890 906
Other expense (118) 6 (74) (14)
-------- ------- ------- -------
Income before taxes 7,329 6,534 3,903 3,420
Income taxes 3,005 2,658 1,615 1,384
-------- ------- ------- -------
Net income $ 4,324 $ 3,876 $ 2,288 $ 2,036
======== ======= ======= =======
Weighted average number of
shares outstanding 4,559 4,539 4,561 4,540
Net income per share $ 0.95 $ 0.85 $ 0.50 $ 0.45
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
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<PAGE> 5
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
MTL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Six months ended June 30,
1996 1995
------- -------
<S> <C> <C>
Cash provided by (used for)
Operating activities:
Net income $ 4,324 $ 3,876
Adjustments for non cash charges 7,923 6,166
Changes in assets and liabilities (3,248) (3,293)
------- -------
Net cash provided by operating activities 8,999 6,749
Investing activities:
Repayment from investee 124 9
Investment in Subsidiary - net of cash (4,602) 0
Capital expenditures (7,129) (14,014)
Proceeds from asset dispositions 811 1,523
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Net cash used for investing activities (10,796) (12,482)
Financing activities:
Proceeds from issuance of long term debt 7,000 8,438
Payment of obligations (5,184) (3,072)
Issuance of common stock - net 29 2
------- -------
Net cash (used in) provided by financing activities 1,845 5,368
Net decrease in cash 48 (365)
Effect of exchange rate changes on cash (35) 0
Cash, beginning of period 322 723
======= =======
Cash, end of period $ 335 $ 358
======= =======
Cash payments for:
Interest $ 1,898 $ 1,722
Income taxes $ 838 $ 1,384
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
-3-
<PAGE> 6
FORM 10 - Q
Item 1. Financial Statements and Exhibits
MTL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying unaudited condensed, consolidated financial
statements of MTL INC. (the "Company") have been prepared in
accordance with the instructions to Form 10-Q and do not include all
of the information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. For
further information, refer to the consolidated financial statements
and notes thereto for the year ended December 31, 1995, included in
the Company's Form 10-K dated March 27, 1996.
Operating results for the quarter ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the
entire fiscal year.
2. ACQUISITION:
On June 11, 1996, the Company closed on a share purchase agreement
wherein the company acquired all the outstanding stock of Levy
Transport Ltd. ("Levy"), a Quebec - based tank truck carrier from Les
Placements Marlin Lt'ee.
Levy services the chemical, petroleum and glass industries with a
fleet of over 400 trucks and tank trailers. The Company intends to
continue providing these services and expand upon existing customer
relationships by increasing fleet size in these markets. The purchase
price of $5,148,745. was financed with borrowings from the Company's
unsecured line of credit with the bank. The terms of the agreement
stipulated $4,416,949. be paid in cash at the time of the closing and
a promissory note in the amount of $365,898. be executed.
Additionally, $365,898. will be held in escrow as security for the
Company in the event any unanticipated claim is asserted. The
purchase price was determined based upon fair market value of the
assets acquired and the discounted, projected profit potential of the
Levy operation after consolidation with the Company. This transaction
was accounted for as a purchase with goodwill in the amount of
$1,616,000. recorded. The Company is amortizing the goodwill over 15
years using the straight line method.
The Company granted 100,000 stock options to the president of Levy in
connection with an employment agreement executed at the Levy closing.
SUPPLEMENTAL DISCLOSURE OF PRO FORMA CONSOLIDATED FINANCIAL
INFORMATION. The accompanying disclosure gives retrospective effect
to the share purchase agreement between the Company and Les Placements
Marlin Lt'ee as if Levy had been owned for the entire period presented.
Revenues for the six months ended June 30, 1996 and 1995:
$119,516,000. and $107,146,000. respectively. Net income for the six
months ended June 30, 1996 and 1995: $4,331,000. and $3,774,000.
respectively. Earnings per share for the six months ended June 30,
1996 and 1995: $0.95 and $0.83 respectively.
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<PAGE> 7
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
MTL INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SECOND QUARTER 1996 COMPARED TO THE SECOND QUARTER 1995
The Company's operating results are affected by the shipments for the bulk
chemical industry. Shipments of chemical products are in turn affected by many
other industries, including consumer and industrial products, automotive, paint
and coatings, and paper, and tend to vary with changing economic conditions.
The Company also participates in the shipment of bulk food products through its
food-grade division. The volume of food products and certain other consumer
products tends to be subject to fewer fluctuations due to swings in economic
activity.
All of the operating results for the second quarter of 1996 have been impacted
by the addition of Levy Transport Ltd. to the Corporate group effective May 1,
1996.
For the quarter ended June 30, 1996, revenue totaled $58.8 million, a 20.8%
increase over revenue of $48.7 million for the same period in 1995. Excluding
Levy revenue, the Company's revenue would have been $53.5 million which
represents an increase of approximately 10% over the comparable period last
year. The Company attributes its increased revenues to continued strength in
chemical industry shipments nationwide, as well as MTL's success in
implementing its private carriage conversion strategy.
For the quarter ended June 30, 1996, operating income totaled $4.7 million,
representing a 9.4% increase compared to $4.3 million for the same period in
1995. This increase is primarily due to the increase in sales.
Net interest expense decreased slightly to $890,000 in the quarter ended June
30, 1996, from $906,000 in the quarter ended June 30, 1995.
Pretax income for the quarter ended June 30, 1996, totaled $3.9 million, a 14%
increase compared to $3.4 million for the same period in 1995. Pretax income
increased primarily due to the increase in operating income year to year.
For the quarter ended June 30, 1996, the Company's net income and earnings per
share were $2.3 million and $0.50 respectively, compared to $2.0 million and
$0.45 respectively for the same period in 1995. Weighted average shares
outstanding increased from 4,540,000 in the second quarter of 1995 to 4,561,000
in the second quarter of 1996. As of June 30, 1996, a total of 4,521,804
shares were outstanding.
5
<PAGE> 8
FORM 10-Q
PART 1 - FINANCIAL INFORMATION
MTL INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity are funds provided by operations and
borrowings under various credit arrangements with financial institutions. Net
cash provided by operating activities totaled $9.0 million for the six month
period ending June 30, 1996, versus $6.7 million for the same period in 1995.
Cash provided by financing activities totaled $1.8 million during the six month
period ending June 30, 1996, compared to $5.4 million provided by financing
activities during the comparable period in 1995. This difference is
attributable to increased payment of obligations in 1996.
Capital used for investing activities totaled $10.8 million for the six month
period ended June 30, 1996, compared to $12.5 million used for the comparable
1995 period. Capital was used primarily to purchase Levy Transport Ltd. and
acquire additional revenue equipment to expand the Company's operations.
In February of 1996, the Company closed on a $25,000,000 ten year fixed rate,
unsecured private placement of debt which was used to pay down the unsecured
revolving credit facility. Additionally, the Company maintains a $50,000,000
unsecured revolving credit facility with a group of banks maturing in May of
1999. As of June 30, 1996, the Company has available $34.2 million under this
revolving credit facility.
The Company's management believes that the available borrowings under the loan
agreement, together with available cash and internally generated funds, will be
sufficient to fund MTL's continued growth and meet its working capital
requirements for the foreseeable future.
6
<PAGE> 9
FORM 10-Q
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
Reference is made to Item 3, on page 10 of the Company's Form
10-K for the year ended December 31, 1995. There have been no
material changes in the Company's legal proceedings since this
filing.
ITEM 6. (a) Exhibits:
27 Financial Data Schedule (For SEC Use Only)
(b) Reports on Form 8-K:
In a Form 8 - K filed June 25, 1996 the Company reported the
acquisition of Levy Transport LTD.
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<PAGE> 10
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MTL INC.
-----------------------------------------
(Registrant)
July 26, 1996 /s/ CHARLES J. O'BRIEN, JR.
- ----------------------------------- -----------------------------------------
CHARLES J. O'BRIEN, JR.,(CEO, PRESIDENT)
(DULY AUTHORIZED OFFICER)
July 26, 1996 /s/ RICHARD J. BRANDEWIE
- ----------------------------------- -----------------------------------------
RICHARD J. BRANDEWIE, (TREASURER)
(PRINCIPAL FINANCIAL OFFICER)
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 335
<SECURITIES> 0
<RECEIVABLES> 33,910
<ALLOWANCES> 1,183
<INVENTORY> 664
<CURRENT-ASSETS> 43,429
<PP&E> 172,816
<DEPRECIATION> 54,554
<TOTAL-ASSETS> 168,870
<CURRENT-LIABILITIES> 27,844
<BONDS> 0
0
0
<COMMON> 45
<OTHER-SE> 64,308
<TOTAL-LIABILITY-AND-EQUITY> 168,870
<SALES> 58,804
<TOTAL-REVENUES> 58,804
<CGS> 0
<TOTAL-COSTS> 54,085
<OTHER-EXPENSES> (74)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 890
<INCOME-PRETAX> 3,903
<INCOME-TAX> 1,615
<INCOME-CONTINUING> 2,288
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,288
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.50
</TABLE>
